Business Plan: Hearth Coffee House
Contents
Financial Projections and Funding Request 15
Executive Summary
Hearth Coffee House will be located in the Central Business District. The business will operate under the sole proprietorship format. A sole proprietorship was chosen due to its simplicity, despite the format posing significant operational risks. One such risk is the unlimited liability, which implies that the owner will be held liable for the liabilities incurred by the business (Mariotti & Glackin, 2015). Nonetheless, measures such as risk management and insurance protections will be put in place to ensure the owner is safeguarded from the risks associated with operating an unlimited liability company. Notably, the business will operate as an independent start-up venture. The launch date will be on 12/1/2025.
Operating a coffee café requires facilities such as an office, a customer service section, and a kitchen. Given the limited capital available, the facilities will be rented, and the goal is to rent facilities near the target market. It is for this reason that a decision was made that the business will be located in the Central Business District, particularly on a street with high human traffic. By renting facilities for the coffee café in a relatively high-traffic area, the business is expected to break even earlier than it would if the building were to be constructed from scratch.
During the start-up process, the necessary arrangements will be made to acquire the specific equipment required to make coffee and snacks. Among others, the business will require an espresso machine, grinders, brewers, distillers, smoothie blenders, and dispensers. Additionally, the coffee shop will require refrigerators, display cases, and ice machines. A snack production line will also be necessary to complement the coffee shop, since some people may not consume coffee in isolation. Guests will be allowed to bring their drinks through a Bring Your Own (BYO) wine bottle arrangement so that they can enjoy some jazz music. This plan outlines the precise strategies and activities that will be undertaken before the business commences operations.
Company Description
The Hearth Coffee House will serve an American-style breakfast and lunch, with a specific emphasis on healthy and tasty meals. In particular, there is a need to emphasize low-fat recipes while ensuring that the taste and appeal of the food are not sacrificed. The increasing consumer demand for healthier food options is one of the reasons behind the decision to incorporate healthy food retail intervention (Alsubhi et al., 2022). Firstly, having healthy diet options will have a positive impact on the community because customers will consume healthy meals; hence, healthy bodies. Another motivation for including healthy diet options is for commercial reasons. According to Alsubhi et al. (2022), retail food entities that offer healthy options receive enhanced visibility, leading to high sales revenue. Also, customers are willing to pay higher prices for foods that will not compromise their health.
Another potential competitive advantage for the business is the decision to allow customers to bring a bottle of wine to our facilities under the BYO wine arrangement. Most of the target customers are young and attend parties. However, there are times they may not want to be in clubs for some occasions. Therefore, allowing them to bring a bottle of wine to the café will offer them a cozy environment to conduct their businesses with little external disturbances. As part of customer service offers, the coffee shop attendants will offer a free corkage service by opening and serving the wine.
Furthermore, the business will offer localized beverage options to cater to the target market. Localization will involve curating the products, experiences, tastes, and preferences to suit the local market. Since the primary target market includes young to middle-aged individuals, significant focus will be on aesthetics. To that end, the packaging for the beverages will be improved to appeal to the target market. Firstly, bold typography aligning with the company’s brand will come in handy in appealing to Gen Z and millennials. Besides, this demographic is environmentally aware and cares about environmental preservation. To that end, the café will adopt eco-friendly and sustainable packaging. Such packaging will include biodegradable and recycled materials acquired from local partners, with visible eco-friendly messaging to appeal to the young consumers.
For the coffee shop, an effort will be made to create an ambient environment for the customers. In this regard, there will be textured walls and mural arts as part of the interior design. Also, the company will adopt a multi-sensory design, which will include natural wood, soft lighting, and acoustic ambiance. Since the business anticipates that some of its customers will come to work from the company’s spaces, seating spaces will be organized in such a way that they include charging stations. For clients who come to socialize, there will be cozy nooks available to facilitate their meetings.
Another way to differentiate the business from rivals is by providing a befitting take-away service. A significant portion of the targeted customers are single individuals without families who are likely to eat out. Given that fact and the growing eating out culture, the café will be strategically positioned to serve these clients. Although such meals are not part of the primary product, they still serve the café’s target clients and will play a major role in retaining them.
Organization and Management
The café’s management will comprise the owner, a general manager, and a technical manager.
Owner/CEO
The café’s owner will double as its CEO and the vision bearer. Since the CEO will possess significant experience in the hospitality sector, it is expected that they will offer in-depth insights into the best practices the café will embrace to gain a competitive edge. One of the CEO’s primary roles is to promote a desired culture, values, and behaviors that promote business success (Kausola, 2018). Among others, the CEO will develop objectives and the vision for the company in liaison with other associates. Given the intense rivalry the new business will face in the food products and beverages industry, it is incumbent upon the CEO to come up with new product development ideas to stay ahead of competitors (Mariotti & Glackin, 2015). As such, the CEO will review the competitive environment, determine what rivals are doing, and formulate strategies to counter them. In addition, the CEO will undertake customer analysis since the business will not have a dedicated marketing team. By conducting market research, the CEO will determine customer preferences and the ever-changing market dynamics.
Moreover, the CEO will be in charge of investments and financing. Transactions involving major capital expenditures must receive the CEO’s approval before being completed (Kausola, 2018). For instance, the company anticipates expanding the café in the future, and this may involve acquiring competitive rivals within the CBD. Such arrangements will involve huge capital expenditures to purchase all the equipment in the acquired cafés. The CEO will have the final word on such matters. Since the CEO is responsible for market scanning, as stated earlier, they will also be responsible for identifying potential geographic areas where the business can diversify (Mariotti & Glackin, 2015). Anything associated with expanding the business outside the current core activities will require the CEO’s input.
Another crucial CEO role will be risk management and controls. The food industry is strictly regulated, hence the need for the business to align with regulatory requirements bordering on health, safety, and quality. The CEO will conduct regular checks in all business areas to ensure strict adherence.
The General Manager
The general manager (GM) will oversee the café’s day-to-day operations. Among others, the general manager will be in charge of the employees’ schedules, performance reviews, and customer service. For the café’s operations to run smoothly, all employees must arrive at the workplace on time so that customers can get whatever they need anytime they visit. Another key role will be to attend to customer complaints. It is commonplace for clients to raise issues in cafés and restaurants. Accordingly, the GM will address such complaints in real-time; hence, the need for someone with outstanding communication skills. Another key role for the general manager will be to implement business policies as prescribed by the CEO. Since the CEO will not always be around to check what employees are engaged in, the manager will act as the link between employees and the CEO. Equally important is the inventory management role, as the GM will be in charge of the inventory management of supplier payments.
According to Obiefuna (2014), general management is equivalent to administrative management. Therefore, the role of the general manager will be to ensure that planned activities have been implemented to the letter. In addition, the GM will take stock of ongoing activities, and whenever they note that associates are deviating from the plan, the necessary corrective measures will be implemented. Obiefuna (2014) emphasizes the need for the general manager to have an in-depth insight into the activities necessary for one to succeed in the industry. As a result, Hearth Coffee House will recruit a hotelier or someone with expert knowledge in hospitality. By relating to the current position of the business and future aspirations, the GM will be in a good position to make short-term and long-term decisions.
The Technical Manager
The technical manager will be the expert directing every functional group. To begin with, the technical manager will ensure that all installations in the café are in good condition. Another area that the technical manager will need to pay significant attention to is the café’s technological aspects, especially the WiFi. This is crucial since the technical manager handles front-desk innovations (Shin et al., 2019). The company anticipates a large number of clients who will come to work from within the facility; hence, the demand for a stable and strong WIFI is inevitable. It is not a good practice to have clients complaining about slow or unavailable Internet connectivity. The technical manager should be sufficiently proactive, such that they will ensure everything is in the right shape without waiting for clients to raise concerns.
Service or Product Line
The Hearth Coffee café will offer clients the best-tasting coffee beverages in the area. This objective will be attained by using high-quality ingredients and adhering to preparation guidelines. The layout of the store, menu listings, and marketing initiatives will be geared toward client satisfaction. Alongside the brewed coffee, Hearth Coffee House will also offer other beverages, including teas and espresso drinks. Also, pastries and hot chocolate will be available. The menu will comprise espresso-based coffee varieties, including mochas, lattes, and espresso. The company will adopt the best guidelines, popularly known as espresso shots. This method involves extremely hot water being passed through coffee beans under high pressure. The shots will then be complemented with steamed milk and/or other additives such as cocoa and caramel, and other products to prepare a complete espresso-based product.
The company will pay attention to the proper preparation of its products to ensure they do not deviate from the established standards. Some of the key considerations while preparing will include having the right amount of milk additives, coffee content, the size of coffee beans, and the temperature at which the product is prepared. A slight deviation from these standards may adversely affect quality, something that can lead to customers withdrawing their patronage.
Market Analysis
The primary target for the Hearth Coffee House will be business owners and workers operating in the Central Business District. Given the fact that a significant portion of this demographic works during the early morning hours, the café will open its doors as early as 6 am. Under business owners and workers, the business will target managers, factory employees, clerks, salespeople, professionals, laborers, tradesmen, and food service workers. These target customers will form the business’s base clientele. Since most of them operate on a limited time, fast and accurate services must be provided (Ramazanov, 2022). Given that a number of traders in the location have promised to come to the café once it is open, the company will take into account the time element seriously once it begins operations.
The second profile of target customers will be locals and residents. As a representative of this demographic, the company draw the portrait of a 25-40-year-old woman with a child, married or single. The woman is presumably a social worker with stable income since she earns an average salary. Such a woman likes to spend time alone when she is off-duty, and would want to sit in the café with her child. While the mother takes her coffee shots, the child likes cream and cakes. Besides, this client does not deny herself the opportunity to consume some cream and cakes over a meeting with acquaintances or when she is spending time alone (Suvattanadilok, 2024). To that end, the Hearth Coffee House products will meet the needs of the client and her child, all at once. As stated earlier, apart from espresso coffee products, the Hearth Coffee House café will also focus on making snacks, which include cream and cakes.
Additionally, based on the survey, the company has created another profile of middle-aged male clients. Among others, this demographic comprises individuals who travel often for business trips. It could also be a bus or taxi driver. This demographic comprises people who prefer to have a cup of coffee in the morning and have become used to it (Suvattanadilok, 2024). Apart from coffee shots, these individuals have become used to consuming a hot snack later in the day or on the eve of weekends and holidays. The Hearth Coffee House will suit such a client due to its location in the city center. There are parking spaces nearby where such a client can park their vehicle, whilst the restaurant is just a walking distance. Such a client would like to be informed about emerging news, particularly weather updates and traffic guidelines; hence, they will leverage the WiFi connection available in the café.
Since all customers, whether young or old, are important for sales growth at Hearth Coffee House, the look of both the student and adult buyers is important. Most adults prefer having conversations over a cup of coffee throughout the day, whereas younger and probably student clients would want a cup of coffee in the morning and later in the evening (Suvattanadilok, 2024). Brief research into this potential clientele shows that they might be interested in a hot sausage periodically, particularly before the weekend at night. Also, both clients are solvent, given the salaries and social benefits they receive regularly. Besides, most of these clientele consider a coffee house as a meeting point; hence, likely to visit often as return clients.
Marketing and Sales
In addition to the overall company strategy, additional sales and marketing approaches will be applied to the different target markets.
Local Residents and Workers
Ads will be placed weekly in the local newspaper in the dining section to reach newspaper readers within the target audience. Alongside the main ads, specials will be placed in the newspaper to attract occasional clients interested in offers. During slow seasons, Hearth Coffee House café will provide coupons, such as 2-for-1 offers. Such coupon offerings are meant to attract on-budget clients who would want to visit the café. According to Chaudhry et al. (2017), newspaper ads have a significant influence on buyer behavior because they are considered credible and have attractive graphics and models likely to attract an audience. In the same breath, the café will distribute leaflets containing the café’s menu to local businesses, encouraging fax-in orders so that these commercial entities can make bulk orders for their associates. In a bid to encourage take-out orders, the coffee café will box take-out orders attractively, and such clients will be given equal priority, similar to the sit-in clients.
Tourists
Hearth Coffee House café will also target local and international tourists visiting the town. To ensure a widespread reach, menus will be distributed to local lodging establishments, encouraging the tourists to visit the café. The company will also take into consideration the fact that tourists prefer consulting renowned publications to get information about available services and facilities. As a result, the company will place advertisements in statewide publications and tourist guides. Further, the café will place menus in information booths so that tourists can get information about the available services locally.
Additional marketing and sales strategies will include offering competitive prices. As stated earlier, Hearth Coffee House intends to market its low-fat, healthy offerings as a game changer to an audience that is increasingly shifting to healthy eating. Such marketing means that the café can attract premium prices. However, based on available business, the café will offer these healthy offerings at relatively lower prices than competitors that offer similar offerings; hence, more sales revenue. An additional marketing catch will be based on customer service. Whenever a client is dissatisfied with a product, it will be replaced promptly, provided the parameters for returning goods are met.
Further, the company will leverage website marketing to reach a wider audience. Website marketing includes a combination of online initiatives such as podcasts, blogs, and press releases, among other online tools (Samur, 2021). One of the advantages of website marketing is that the business can market 24/7 (Samur, 2021). Using the online platform, the company will personalize and brand its products based on emerging trends and customer preferences.
Financial Projections and Funding Request
Hearth Coffee House – Initial Required Funds
| Item (Fixed Assets) | Amount | Totals | Depreciation |
| Real Estate | |||
| Buildings | 30 | ||
| Leasehold Improvements | 4,000 | 10 | |
| Equipment | 21, 000 | 10 | |
| Furniture and fixtures | 1500 | 6 | |
| Vehicles | 6 | ||
| Other fixed | 6 | ||
| 26,500 |
Operating Expenses
| Item | Amount |
| Salaries and Wages | |
| Insurance | 2000 |
| Start-up Inventory | 5000 |
| Legal and Accounting fees | |
| Rent Deposits | 1000 |
| Utility Deposits | |
| Supplies | 500 |
| Advertising and promotions | 1000 |
| Licenses | |
| Other Initial cost | 2000 |
| Working capital | 2000 |
| (13,500) | |
| Total Funds Required | (13500 + 26500) $40,000 |
Funding Request
Owner’s Injection
- Amount the owner will inject into the business: $10,000
- Recommended minimum level, based on established standards: $8000
- The percentage of the owner’s injection as part of the total requirement: 25%
- Funding requirement from external sources: $30,000
Recommended Funding Structure for the Required $30,000 from External Sources
- Commercial loan from a commercial bank: $30,000
- Interest rate to be charged by the bank: 11%
- Terms of repayment (months): 60 months
- Total loan payable per month: $653
Since the owner will invest $10,000 into the business, the remaining amount will be catered to by the loan from a commercial bank. Therefore, the start-up process will begin once the commercial loan has been processed.
References
Alsubhi, M., Blake, M., Nguyen, T., Majmudar, I., Moodie, M., & Ananthapavan, J. (2022). Consumer willingness to pay for healthier food products: A systematic review. Obesity Reviews, 24(1). https://pmc.ncbi.nlm.nih.gov/articles/PMC10909406/
Chaudhry, A. A., Awan, F. B., Syed, S., & Hussain, S. S. (2017). Impact of print advertising on brand image and consumer buying behaviour. Journal of Marketing and Consumer Research, 41. https://core.ac.uk/download/pdf/234694368.pdf
Kausola, S. (2018). The role of the CEO in the strategy process [Master´s Thesis, University of Turku]. https://www.utupub.fi/bitstream/handle/10024/146090/Kausola_Severi_progradu.pdf
Mariotti, S., & Glackin, C. (2015). Entrepreneurship and small business management. Pearson.
Obiefuna, O. (2014). The role of top management in business organizations. Review of Public Administration and Management, 3(5). https://www.arabianjbmr.com/pdfs/RPAM_VOL_3_5/10.pdf
Ramazanov, S. (2022). Marketing approaches to increase sales in a coffee shop: Case company: Frappua. [Bachelor’s Thesis, UAS]. https://www.theseus.fi/bitstream/handle/10024/752333/Ramazanov_Samat.pdf
Samur, S. (2021). The effects of web-based technologies on marketing activities of professional sports clubs. Journal of Educational Issues, 7(1), 546. https://doi.org/10.5296/jei.v7i1.18651
Shin, H., Perdue, R. R., & Kang, J. (2019). Front desk technology innovation in hotels: A managerial perspective. Tourism Management, 74(74), 310–318. https://doi.org/10.1016/j.tourman.2019.04.004
Suvattanadilok, M. (2024). Market variables influence customer behavior toward coffee business growth. Cogent Business & Management, 11(1). https://doi.org/10.1080/23311975.2024.2329242
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Question 
The purpose of your Course Project is to demonstrate your understanding, comprehension, and mastery of the following concepts:
Develop both competence and confidence through reading about Entrepreneurship
Hearth Coffee House
Working with problems and cases that include real-life experiences with the subject
Use Entrepreneurship terminology
Throughout this module you will be acquiring knowledge on Entrepreneurship topics, theories, as well as terminology. You will apply this new knowledge to your Course Project.
Instructions:
For your Course Project, you will be developing a business plan. While there is no one single best format for a business plan, for this assignment you should use the format given on pages 69 to 91 of your textbook. However, you may choose any format of your choosing.
The US Small Business Administration (SBA) at: https://www.sba.gov/writing-business-plan has incredible resources and articles to help you with the development of your business plan.
It is suggested that you begin working on your Course Project during Week 1, and complete one – two milestone per week through Week 13.
You will be working on the business plan in parts. By the time you are done, you will have a completed product ready to be turned in. Your business plan must have the following parts as recommended by the US Small Business Administration. The SBA recommendation increases your chances of qualifying for business funding under SBA’s 7a Business Loan Program.
Milestone 1: Executive Summary
Your executive summary is a snapshot of your business plan as a whole and touches on your proposed company’s profile and goals.
Milestone 2: Company Description
Your company description provides information on what you do, what differentiates your business from others, and what markets your business plans to serve.
Milestone 3: Organization & Management
Every business is structured differently. Describe how your business is going to be structured.
Milestone 4: Service or Product Line
What do you sell? How does what you are going to sell benefit your customers? What is the product lifecycle?
Milestone 5: Market Analysis
Before launching your business, it is essential for you to research your business industry, market and competitors. This section explains your research findings and how they relate to your proposed business.
Milestone 6: Marketing & Sales
How do you plan to market your business? What is your sales strategy?
Milestone 7: Financial Projections and Funding Request
Forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets
Milestone 8: Funding Request
How much money will you need? Where do you hope to get it from?
At the completion of week 13 you will have accumulated your eight (8) Milestones. You will then compile your eight (8) completed milestones, a cover page, a table of contents, and a properly formatted APA References Page in a professional Word Document portfolio to submit for grading at the end of Week 13.
Final Course Project – Will be submitted in a professional Word Document portfolio and turned in by the end of Week 13 in the following required format:
1. Cover Page
2. Table of Contents
3. Eight finalized milestones
4. APA Formatted References Page
***My business plan is to open coffee cafe with BYO(bring your own) wine bottle jazz nights.
Included files are examples of other students’ course projects that the professor added as examples.
textbook:
Required Text(s): Entrepreneurship
Author(s): Mariotti, Steve & Glackin, Caroline
Edition: 5th
Year: 2020
Publisher: Pearson
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